IRS waives the 60-day IRA rollover requirement

Plain-English summary

A taxpayer received what was represented as a duplicate required minimum distribution after a communication problem with a financial institution. The taxpayer deposited the distribution, later discovered the problem, and attempted to restore the amount after the 60-day rollover period had expired. The IRS found that the circumstances supported relief under § 408(d)(3)(I) and waived the 60-day requirement. It granted 60 days from the ruling date to make a rollover contribution of an amount equal to the distribution, subject to the other rollover requirements.

Ruling snapshot

• Question: May the taxpayer receive a waiver of the 60-day IRA rollover requirement?
• Outcome: Approved, subject to the stated rollover conditions.
• Key authorities: IRC §§ 408(d)(3), 408(d)(3)(I), 408(a)(6), and 72; Rev. Proc. 2003-16.

Full text (IRS public release)

DEPARTMENT OF THE TREASURY
201405032
INTERNAL REVENUE SERVICE

WASHINGTON, D.C. 20224

TAX EXEMPT AND
GOVERNMENT ENTITIES
DIVISION

NOV 06 2013

Uniform Issue List: 408.03-00 SE:T:EP:RA:T3

Legend:
Taxpayer A:
IRA X:

Account B:

Financial Institution V:
Amount M: -

Amount N:

Dear

This is in response to your letter dated December 31, 2012, in which you request a waiver of the 60-day rollover requirement contained in section 408(d)(3) of the Internal Revenue Code (Code).

The following facts and representations have been submitted under penalty of perjury in support of the ruling requested.

Taxpayer A maintained an Individual Retirement Account (IRA), IRA X, with Financial Institution V. Taxpayer A, over age 70 %, asserts that on December 15, 2010, he received a distribution of Amount N from IRA X. Taxpayer A asserts that his failure to accomplish a rollover of Amount N was due to a miscommunication with Financial Institution V which caused a duplicate required minimum distribution for year 2010. Taxpayer A further represents that Amount N has not been used for any other purpose.

201405032

On November 29, 2010, Taxpayer A, believing that his required minimum distribution for 2010 had not been made as requested, went online and requested a distribution of Amount M from IRA X. On December 15, 2010, Financial Institution V issued a check in Amount N to Taxpayer A and he deposited the check on December 23, 2010, into his checking account. The difference between Amount M and Amount N is one dollar.

Taxpayer A believed that the check issued on December 15, 2010, was related to his November 29, 2010, distribution request when in fact his distribution request actually resulted in a transfer being made on November 29, 2010, from IRA X to Account B. The check issued on December 15, 2010, was actually for the year 2010 required minimum distribution.

Upon receiving his Form 1099-R for 2010, Taxpayer A realized that there had been a miscommunication regarding the required minimum distribution for year 2010. Taxpayer A immediately issued a check to Financial Institution V to restore the duplicate distribution but Financial Institution V returned the check because the 60-day period had expired for completing the rollover.

Based on the facts and representations, you request a ruling that the Internal Revenue Service (Service) waive the 60-day rollover requirement, with respect to the distribution of Amount M, contained in section 408(d)(3) of the Code.

Section 408(d)(1) of the Code provides that, except as otherwise provided in section 408(d), any amount paid or distributed out of an IRA shall be included in gross income by the payee or distributee, as the case may be, in the manner provided under section 72 of the Code.

Section 408(d)(3) of the Code defines, and provides the rules applicable to IRA rollovers.

Section 408(d)(3)(E) of the Code provides that the rollover provisions of section 408(d) do not apply to any amount required to be distributed under section 408(a)(6).

Section 408(d)(3)(A) of the Code provides that section 408(d)(1) of the Code does not apply to any amount paid or distributed out of an IRA to the individual for whose benefit the IRA is maintained if:

(i) the entire amount received (including money and any other property) is paid into an IRA for the benefit of such individual not later than the 60th day after the day on which the individual receives the payment or distribution; or

(ii) the entire amount received (including money and any other property) is paid into an eligible retirement plan (other than an IRA) for the benefit of such individual not later than the 60th day after the date on which the payment or distribution is received, except that the maximum amount which may be paid into such plan may not exceed the portion

201405032

of the amount received which is includible in gross income (determined without regard to section 408(d)(3)).

Section 408(d)(3)(B) of the Code provides that section 408(d)(3) does not apply to any amount described in section 408(d)(3)(A)(i) received by an individual from an IRA if at any time during the 1-year period ending on the day of such receipt such individual received any other amount described in section 408(d)(3)(A)(i) from an IRA which was not includible in gross income because of the application of section 408(d)(3).

Section 408(d)(3)(D) of the Code provides a similar 60-day rollover period for partial rollovers.

Section 408(d)(3)(E) of the Code provides that the rollover provisions of section 408(d) do not apply to any amount required to be distributed under section 408(a)(6).

Section 408(d)(3)(I) of the Code provides that the Secretary may waive the 60-day requirement under sections 408(d)(3)(A) and 408(d)(3)(D) of the Code where the failure to waive such requirement would be against equity or good conscience, including casualty, disaster, or other events beyond the reasonable control of the individual subject to such requirement. Only distributions that occurred after December 31, 2001, are eligible for the waiver under section 408(d)(3)(I) of the Code.

Rev. Proc. 2003-16, 2003-4 I.R.B. 359 (January 27, 2003) provides that in determining whether to grant a waiver of the 60-day rollover requirement pursuant to section 408(d)(3)(I), the Service will consider all relevant facts and circumstances, including: (1) errors committed by a financial institution; (2) inability to complete a rollover due to death, disability, hospitalization, incarceration, restrictions imposed by a foreign country or postal error, (3) the use of the amount distributed (for example, in the case of payment by check, whether the check was cashed); and (4) the time elapsed since the distribution occurred.

The information presented and documentation submitted by Taxpayer A is consistent with Taxpayer A’s assertion that his failure to accomplish a rollover of Amount M was due to a miscommunication with Financial Institution V which caused a duplicate required minimum distribution for year 2010.

Therefore, pursuant to section 408(d)(3)(I) of the Code, the Service hereby waives the 60-day rollover requirement with respect to the distribution of Amount N from IRA X. Pursuant to this ruling letter, Taxpayer A is granted a period of 60 days measured from the date of the issuance of this letter ruling to make a rollover contribution of an amount equal to Amount N to an IRA (or IRAs) described in Code section 408(a). Provided all other requirements of Code section 408(d)(3), except the 60-day requirement, are met with respect to such IRA contribution, the contribution will be considered a rollover contribution within the meaning of Code section 408(d)(3).

201405032

No opinion is expressed as to the tax treatment of the transaction described herein under the provisions of any other section of either the Code or regulations, which may be applicable thereto.

This letter is directed only to the taxpayer who requested it. Section 6110(k)(3) of the Code provides that it may not be used or cited as precedent.

If you wish to inquire about this ruling, please contact Please address all correspondence to SE:T:EP:RA:T3.

Sincerely,

Laura B. Warshawsky, Manager
Employee Plans Technical Group 3

Enclosures:
Deleted copy of letter ruling
Notice of Intention to Disclose